Wednesday, December 17, 2014

Quote of the Day on Topics Pertaining to Cost-Benefit Analysis

This brings us to the Food and Drug Administration, which is responsible for carrying out nutrition labeling in restaurant chains. (This is part of the Affordable Care Act.) When federal agencies propose new regulations, they’re required to do an evaluation to make sure the costs do not outweigh the benefits. Sounds logical enough. But this is the government we’re talking about, and recently the F.D.A.'s interpretation of this order has taken a turn for the absurd. This summer, the F.D.A. discounted by 70 percent the benefits of increased tobacco legislation. Why? That was the value of the “pleasure” lost by smokers, according to the agency, pleasure these addicts would miss by giving up a nasty habit.

Mass- and hyper-produced food, of course, is ostensibly not as dangerous and arguably more pleasant in its consumption than cigarettes. So the agency was required to discount the “pleasure” lost by eaters who would be discouraged from buying fast food because they determined that its massive calorie load and pathetic nutrition profiles were perhaps not desirable. In an “alternative” analysis, the cost of that pleasure was put at $5 billion over 20 years, which is about the same as the low end of the estimated value of the health benefit we’ll derive by eating less junk.....

There are, of course, the obvious and almost inane questions like, “How could the F.D.A. possibly know that eaters will lose ‘pleasure’ by eating healthy food as opposed to unhealthy?” “Who is the F.D.A.'s pleasure analyst?” “How can a voluntary choice by a better-informed person to eat better food and improve his or her life possibly be a ‘cost’ ”? And finally, “How can you possibly fix a monetary value on this?” (By the way, this whole scheme, and that’s what it is, was cooked up by a lone graduate student, who determined that “healthier foods are worse off on other dimensions such as taste, price, and convenience.” Clearly, this is a person who’s never prepared broccoli raab with oil, garlic and chiles.)

It there something objectionable about assuming that giving up the pleasure of the marginal cigarette is part of the cost incurred to achieve the health benefits of smoking one fewer cigarettes? And if that equals 70% of the benefit, so what? The conclusion is the same.